McDonald's Sales Hit by E.coli Outbreak and Discount Concerns

McDonald's reported a sharper-than-expected 1.4% drop in U.S. comparable sales due to an E.coli outbreak and frugal consumer spending. The outbreak led to a temporary suspension of sales at some outlets, impacting the burger chain's traffic. International growth mitigated some losses, but concerns over heavy discounts linger.

McDonald's revealed a significant 1.4% decline in U.S. comparable sales for the fourth quarter, attributing the drop to an E.coli outbreak and consumers curbing their spending. This decrease represents the steepest since the pandemic's peak, although international sales offered some reprieve.

A specific E.coli incident starting October 22 negatively impacted customer visits, forcing McDonald's to halt sales of Quarter Pounders at a subset of U.S. locations. Furthermore, the company faced a challenge as heavy discounting, which contributed to over a third of sales, pressured franchise margins.

Despite a slight uptick in customer traffic, analysts warn McDonald's reliance on discounts could harm future financial performance. The company's international markets saw a 4.1% rise in licensed market sales, led by the Middle East and Japan, offering a glimmer of hope amid domestic struggles.

(With inputs from agencies.)